Ownership Structure As A Determinant Of Capital Structure An Empirical Study Of Dax Companeis

Diploma Thesis from the year 2004 in the subject Business economics - Business Management, Corporate Governance, grade: 1.1, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, language: English, abstract: Empirische Diplomarbeit die mit einer multivariaten Regression untersucht, ob sich die beobachtete Variabilität der Kapitalstrukturen von Unternehmen durch unterschiedliche Eigentümerstrukturen erklären lässt.

The empirical studies presented in this book model the endogeneity by applying the simultaneous equations methodology on the relation of ownership and financial performance as well as on different ownership dimensions themselves. Its final model comprises a four equations system containing performance, general ownership concentration, managerial and institutional ownership.

Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.

Capital structure theory is one of the most dynamic areas of finance and forms the basis for modern thinking on the capital structure of firms. Much controversy has resulted from comparisons of the theory of capital structure originally developed by Franco Modigliani and Merton Miller to real-world situations. Two competing theories have emerged over the years, the optimal capital structure theory and the pecking order theory.Arvin Ghosh begins with an overview of the controversies regarding capital structure theories, and then statistically tests both the optimal capital structure and pecking order theories. Using the binomial approach he analyzes the determinants of capital structure while discussing the role of market power in determining capital structure decisions. Ghosh probes the questions of new stock offerings and stockholders' returns, and analyzes capital structure and executive compensation. He then looks into debt financing ownership structure, and the controversal relationship between capital structure and firm profitability. Finally, he discusses the latest developments in the field of capital structure.A concise overview of a major issue in business economics and finance, this volume provides a fuller understanding of capital structure influence on the financial performance of firms, and will certainly stimulate further debate. While hundreds of scholarly articles have been written on the subject this is the first book to test competing theories against measurements of firms' performance and their underlying capital structure.

The theory of capital structure is one of the most exciting and complex topics in corporate finance. After many years of debate it is still extremely difficult to provide a conclusive answer to the question which capital structure maximises the value of a company and what factors determine the optimal mix of debt and equity capital.This book provides a comprehensive introduction to capital structure theory and investigates its practical relevance in the German market. The main objectives are to explore the link between capital structure theory and corporate practice and to test determinants of capital structure choice empirically.The book has been written for students, researchers, and academics, but also for practitioners seeking empirical evidence of capital structure theory and an empirical model that can be used to estimate the optimal level of debt for an individual company in relation to an existing industry optimum.

This paper examines the capital structure of firms listed on the Poland's stock market and identifies lessons that may be useful for the newly formed stock exchanges of the Baltic countries. 2 Several empirical studies have examined the determinants of debt-equity ratios. Most of them, such as Titman and Wessels (1988), Zeckhauser and Pound (1990), and Rajan and Zingales (1995), focus on industrial countries and find that high leverage benefits firm performance. Others, such as Hussain (1996) and Cornelli, Portes and Schaffer (1996) look at developing countries. Hussain (1996) concentrates on Indonesia and finds that high leverage has a negative effect for a sample of listed firms. He introduces shareholder concentration as an additional variable influencing leverage. Cornelli, Portes and Schaffer (1996) examine a large sample of both listed and unlisted firms for Poland, the Czech Republic, and Hungary, asking why debt-equity ratios are generally so low in these countries. They speculate that these low levels may be detrimental to the economy. Despite these two examples, most of the well-known studies on capital structure analyze only G-7 or industrialized countries. Thus considerable scope remains for examining developing countries, especially transition economies. This paper analyzes the capital structure of listed firms in Poland. We are interested in how firms choose among retained earnings, debt, and shares of stock. Cornelli, Portes and Schaffer focus only on the choice between total debt and total equity since they also include a sample of unlisted firms.